Microsoft CEO Steve Ballmer to retire within 12 months

Updated
Sat Aug 24 10:42:04 EST 2013

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Steve Ballmer, 57, took over as CEO in 2000 from co-founder Bill Gates.

Microsoft chief executive Steve Ballmer has announced he will retire within 12 months, opening a new chapter for Microsoft which has faced criticism for not keeping pace with a fast-changing tech sector.

"There is never a perfect time for this type of transition, but now is the right time," Mr Ballmer said in a statement.

"My original thoughts on timing would have had my retirement happen in the middle of our company's transformation to a devices and services company.

"We need a CEO who will be here longer term for this new direction," he said.

Ballmer, 57, took over as CEO in 2000 from co-founder Bill Gates, a classmate and friend from their days at Harvard University in the 1970s.

When Mr Ballmer took over, Microsoft was the undisputed tech sector leader and the world's largest company in market value.

But in recent years Microsoft has struggled as consumers began to transition from desktop and laptop PCs to mobile devices.

While its Windows software is used on the vast majority of personal computers, Microsoft has had little impact in the fast-growing segments of tablets and smartphones.

"Microsoft has clearly been on the wrong track for a long time," said Roger Kay, analyst at Endpoint Technologies Associates.

"Essentially Microsoft missed the shift to high mobility entirely."

Other analysts say Mr Ballmer contributed greatly to the company.

"Ballmer did a lot for Microsoft while he was there, and his accomplishments should not be diminished by the troubles Microsoft has had the past couple of years," analyst with J. Gold Associates Jack Gold said.

Still, Gold said: "it really is time for Microsoft to chart a new course and correct some of the issues and challenges plaguing it, and Ballmer was not the right individual to do that."

Shares spike

The news surprised financial markets and shares in the company rose by nearly 9 per cent in pre-market trading.

At end of trade, shares were up 6.9 per cent to $34.61.

The shares, which topped $58 in 1999, have been little changed in the past decade.

Citi analyst Walter Pritchard said this was positive news for Microsoft.

"Some investors have fantasised about this event and we've often heard 'the stock would be up 10 per cent if Ballmer retires'," Mr Pritchard said.

"A new CEO will likely have broad freedom to make changes to the business, including exiting businesses and returning more capital."

Replacing Steve Ballmer

Mr Ballmer will continue in the interim as CEO until a new one is chosen.

The board of directors has appointed a special committee to direct the process chaired by independent director John Thompson and including Mr Gates, Chuck Noski and Steve Luczo.

The committee will consider both external and internal candidates.

"As a member of the succession planning committee, I'll work closely with the other members of the board to identify a great new CEO," Mr Gates said.

Some Microsoft watchers mentioned names of current or former executives as potential successors.

But Citi's Pritchard said: "We expect the company to focus exclusively on outside candidates, meaning that it is very difficult to predict who could be CEO and what direction they will take the company."